Japan's Line Goes All-In On Video and AI to Return to Growth

Line Corp. wants to transform Japan’s most popular messaging app into an all-in-one communications and entertainment service centered on video and everyday services powered by artificial intelligence.

Growth in the next five years will come from Line messenger increasingly becoming the hub for its more than 171 million users’ needs both on- and off-line, Chief Executive Officer Takeshi Idezawa said at an annual strategy briefing in Tokyo on Thursday. The company sketched out a smart portal strategy in which video editing and streaming and AI-driven offerings will form the core of its business.

Line’s intention to entwine its app with users’ daily routines echoes an approach that helped Tencent Holdings Ltd.’s WeChat amass 900 million-plus users and become China’s most popular mobile service. The Japanese company has seen user growth flag as it narrowed its focus to the key markets of Japan, Taiwan, Thailand and Indonesia to fend off competition from the likes of Facebook Inc.’s Whatsapp and Messenger.

The Tokyo-based company has to come up with new ways to make people spend on what’s otherwise a free messaging service. It’s relied on advertising to replace dwindling revenue from games and digital stickers, and is now betting that the future envisioned services will prove key to reviving growth mid-term. Starting this fall, it will begin selling the Wave table-top speaker for 15,000 yen ($137), joining a wave of Silicon Valley companies from Amazon and Google to Apple developing digital assistants for the home.

The company is also developing a separate voice-operated assistant with a built-in display, and is collaborating with Sony Corp. on a wearable device.

“Our vision is for a world that is more than ever connected by Line,” Idezawa said at the briefing. The “Line account is becoming a definitive hub for information flows in the smartphone era.”

Shares in the company closed 1 percent higher in Tokyo. They’re down 2 percent this year, underperforming the benchmark Topix’s 4.6 percent gain.

In the six years since its launch, Line has grown from a basic chat service to an ecosystem of offerings. In addition to sending 27 billion messages a day, its users spend on average 40 minutes daily reading news, listening to music and paying bills. The company is also planning to launch a food delivery service in Japan this summer.

The company in March outlined an artificial-intelligence strategy to try and transform Japan’s most popular messaging service while pitting it against Google, Facebook and Amazon.com Inc. It’s unveiled software tools that can be used to develop new features for the online digital assistant that powers Wave and is already capable of conversing in Japanese and Korean. Users can talk to the assistant, getting the latest weather and news through either a dedicated smartphone app or a tabletop-speaker similar to Amazon’s Echo.

Line believes it can leverage local knowledge to beat tech giants in its home country and markets where its messaging service is popular, including South Korea, Taiwan, Thailand and Indonesia. It developed its AI platform with parent Naver Corp., a South Korean company that operates the country’s dominant search engine, displacing Google in a nod to the advantages of knowing the local market.

“In the next five years, AI will impact all sorts of areas of life,” Idezawa said. “It will also spark intense competition worldwide, so we have to carefully focus our efforts.”